Full Judgment Text
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CASE NO.:
Appeal (civil) 3166 of 2006
PETITIONER:
Union of India & Anr.
RESPONDENT:
Manik Lal Banerjee
DATE OF JUDGMENT: 26/07/2006
BENCH:
S.B. Sinha & Dalveer Bhandari
JUDGMENT:
J U D G M E N T
[Arising out of S.L.P. (C) No. 21446 of 2005]
S.B. SINHA, J :
Leave granted.
The Respondent was a Station Master working in Sodepur Railway
Station, Eastern Railway. He retired on 31.1.1995. He was paid 16 =
months emoluments comprising basic salary and 20% dearness allowance
towards Death-Cum-Retirement Gratuity.
One Pritam Singh who is said to be similarly situated, however,
claimed and obtained such benefits of gratuity in terms of the provisions
contained in the Payment of Gratuity Act, 1972 (for short "the 1972 Act") in
terms whereof the element of dearness allowance was calculated at the rate
of 125% of basic salary. A special leave petition filed thereagainst was
dismissed by this Court by an order dated 13.2.2002 holding:
"This is not a fit case for our interference under
Article 136 of the Constitution. Hence the appeal
is dismissed."
Principally, relying on the said decision, the Respondent filed an
original application before the Central Administrative Tribunal claiming
payment of gratuity on the same terms and for recovery of purported arrears
of the difference of gratuity. The Tribunal by an order dated 25.2.2004
directed the Appellant to consider the Respondent’s case whereupon a
speaking order was passed by the Appellant on 4.6.2004 inter alia holding
that the case of the Respondent was not governed by the provisions of the
1972 Act but by the provisions of the Railway Services (Pension) Rules,
1993 (for short "the 1993 Rules").
Another original application was filed by the Respondent questioning
the validity of the said order before the Tribunal which was registered as OA
No. 576 of 2004. The said application was allowed by an order dated
1.12.2004 holding inter alia:
"Mr. De, the learned counsel for the respondents to
a query replied that Pritam Singh case was
complied with by the Railway Authorities. It is
most unfortunate to state here that the DRM
treated the matter in a different manner in order to
avoid payment and has passed such illegal order by
stating that dismissal of SLP by the Hon’ble
Supreme Court does not amount to a decision on
merits. He has lost sight of the fact that the CAT
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does not hold the jurisdiction to sit in appeal
against the order passed by the Controlling
Authority under the Gratuity Act. In Pritam
Singh’s case an independent direction was passed
by the CAT by invoking the provisions of Gratuity
Act. Similar benefit ought to have been given to
the present applicant. From the totality of the facts
and circumstances of the case, I direct the
respondent No. 2 to pay the Gratuity as claimed by
the applicant in terms of Section 4 of the Indian
Gratuity Act, 1972 together with the interest
@12% per annum from the date when it became
due till the date of payment and file compliance
report within four months, failing which
appropriate action, as deemed fit, will be taken."
A writ petition filed by the Appellant questioning the legality of the
said Order was dismissed by a Division Bench of the High Court holding
that the 1993 Rules do not make an employee of the Railways disentitled to
the benefit of gratuity under the 1972 Act. It was furthermore held that there
was no reason as to why the decision of the Tribunal in Pritam Singh would
not be given effect to.
Mr. K.P. Pathak, learned Additional Solicitor General appearing on
behalf of the Appellant urged that Section 2(e) of the 1972 Act will have no
application in view of the fact that the Respondent being a railway servant
was an employee of the Central Government and was being governed by the
1993 Rules.
Mr. Manik Lal Banerjee, Respondent appearing in person, on the
other hand, contended that Section 2(e) of the 1972 Act should be
interpreted conjointly with Section 2(f) defining ’employment’ and Section
2(a)(i) defining ’establishment’ and so construed, it must be held that the
same is applicable to the cases of railway employees also. Strong reliance in
this behalf has been placed on The Executive Engineer (Construction)
Southern Railway, Quilon and others v. M.P. Sankara Pillai [ILR 1981 (1)
Ker 164]
It was urged that in view of Rule 15(4)(ii) of the 1993 Rules, as
pension and commuted value thereof are only governed by the Pensions Act,
1871, the matter relating to payment of gratuity could not have been brought
within the purview of the 1993 Rules. As pension and gratuity are not
bounties, the same should be given a liberal construction. Mr. Banerjee
furthermore contended that the decision of the Joint Consultative Machinery
(JCM) to pay 20% dearness allowance in emoluments for the purpose of
gratuity being not a decision under a legislative Act, the same is subservient
to the provisions of the 1972 Act. In any event, the Fifth Pay Revision
Commission having made an interim report that 90% of dearness allowance
should be paid to the employees who have retired from 1.4.1995 to
31.12.1995, there is no reason as to why the Respondent should be deprived
from the benefit thereof.
The 1972 Act was enacted to provide for a scheme inter alia for
payment of gratuity to employees in relation to railway companies.
Section 2(e) of the 1972 Act defines ’employee’ to mean "any person
(other than an apprentice) employed on wages, in any establishment, factory,
mine, oilfield, plantation, port, railway company or shop to do any skilled,
semi-skilled, or unskilled, manual, supervisory, technical or clerical work,
whether the terms of such employment are express or implied, and whether
or not such person is employed in a managerial or administrative capacity,
but does not include any such person who holds a post under the Central
Government or a State Government and is governed by any other Act or by
any rules providing for payment of gratuity." The definition, thus, excludes
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an employee holding civil post under the Central Government and
government by another Act or Rules providing for gratuity.
Section 2(f) of the 1972 Act defines ’employer’ inter alia to mean, in
relation to any railway company belonging to or under the control of the
Central Government or the State Government, a person or authority
appointed by the appropriate government for the supervision and control of
the employees. Section 4 provides for payment of gratuity to an employee
on the termination of his employment after he has rendered continuous
service for not less than five years inter alia on his superannuation. Sub-
section (2) of Section 4 provides that for every completed year of service or
part thereof in excess of six months, the employer shall pay gratuity to an
employee at the rate of fifteen days’ wages based on the rate of wages last
drawn by the employee concerned, which amount in view of sub-section (3)
of Section 4 shall not exceed three lakhs and fifty thousand rupees.
The 1972 Act is applicable inter alia to the ’establishment’ belonging
to a railway company. The amount of gratuity, however, is payable to an
employee. The interpretation clause contained in Section 2(e) takes out
from the purview of the said Act a person who holds inter alia post under the
Central Government and whose terms and conditions of service are
governed by an Act or the Rules providing for payment of gratuity. The
1993 Rules provides for payment of gratuity in Rule 70 in the following
terms:
"70. Retirement gratuity or death gratuity. \026 (1)(a)
In the case of a railway servant, who has
completed five years’ qualifying service and has
become eligible for service gratuity or pension
under rule 69, shall, on his retirement, be granted
retirement gratuity equal to one-fourth of his
emoluments for each completed six monthly
period of qualifying service subject to a maximum
of sixteen and one-half times the emoluments and
there shall be no ceiling on reckonable
emoluments for calculating the gratuity\005"
Rule 49 of the 1993 Rules provides for the manner in which
emoluments of such an employee should be calculated. ’Pay’ in those rules
means the pay in the revised scales under the Fourth Pay Commission
Report.
Following representations made on behalf of the employees; the
Central Government in a JCM conceded grant of a part of dearness
allowance to be reckoned as dearness pay (DP) for the purpose of computing
the amount of gratuity and the same was treated an additional advantage
over and above those allowed in the recommendations of the Fourth Pay
Commission. The quantum of such dearness pay was taken on the
Consumer Index as on 1.7.1988 and 20% of dearness allowance was
declared to be payable as dearness pay. Such benefit was extended also to
the railway employees whose retirement had taken place on or after
16.9.1993.
The Tribunal indisputably granted relief to the Respondent solely
relying on or on the basis of the decision in Pritam Singh. In Pritam Singh’s
case indisputably the question as regards non-applicability of the 1972 Act
and consequent applicability of the 1993 Rules had not arisen for
consideration. The controlling authority in Pritam Singh’s case proceeded
on the basis that the provisions of the 1972 Act were applicable. The
Tribunal in Pritam Singh opined:
"\005The Controlling Authority has considered the
definition of term ’wages’ and came to the
conclusion that the applicant is eligible for getting
the gratuity. We do not see any infirmity or
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illegality on the order as averred by the Petitioner
in this Original Application. According to us,
there is no merit in the application which is only to
be dismissed. Accordingly, we dismiss Original
Application with no order as to costs."
Our attention has also been drawn to the fact that the Central
Administration Tribunal, Principal Bench in OA No. 700 of 2004 in the
matter of Federation of Central Government Pensioners’ Association
Organisations, Calcutta v. Union of India by a judgment and order dated 1st
October, 2004 held that the decision of the Tribunal in Pritam Singh was
rendered per incuriam and, thus, did not create any binding precedent. The
Railway Administration in terms of its speaking order dated 4.6.2004 also
held so. The Tribunal, unfortunately, did not apply its mind to that aspect of
the matter and proceeded to grant relief to the Respondent herein solely
relying on or on the basis of the said decision. Pritam Singh, in our opinion,
did not create any binding precedent. Only because this Court dismissed the
special leave petition, the same would not mean that any law within the
meaning of Article 14 of the Constitution was laid down thereby. Pritam
Singh was evidently rendered per incuriam as the statutory provisions
relevant for determining the issue had not been taken into consideration.
It is well-settled that a decision is an authority for what it decides and
not what can logically be deduced therefrom. The decision in Pritam Singh
having indisputably not taken into consideration, the exclusionary clause
contained in Section 2(e) of the 1972 Act cannot be held to be an authority
for the proposition that despite the provisions of the 1993 Rules, the 1972
Act would apply in the case of the railway servants.
It is now well-settled that if a decision has been rendered without
taking into account the statutory provision, the same cannot be considered to
be a binding precedent. This Court, in Pritam Singh, while exercising its
discretionary jurisdiction, might have refused to interfere with the decision.
The same, therefore, did not constitute any binding precedent. The Tribunal
and consequently the High Court, therefore, committed a manifest error in
holding otherwise.
Submission of Mr. Banerjee that if the 1972 Act applies to an
establishment belonging to a railway company and the persons specified in
Section 2(f) are the employers, despite exclusion of railway servants
governed by the provisions of the 1993 Rules from the purview of the
definition of ’employee’ in terms of Section 2(e) of the Act, the case shall be
governed by the 1972 Act, cannot be accepted.
The High Court noticed the definition of ’employee’ contained in
Section 2(e) of the 1972 Act but while deciding the issue it fell into an error
in coming to the conclusion that there was nothing in the 1972 Act so as to
exclude the benefit thereof to a railway employee. It failed to properly
construe the said provision.
The Kerala High Court in M.P. Sankara Pillai (supra), whereupon
strong reliance has been placed by Mr. Banerjee, was considering a case of
casual labour. Indian Railway Administration although was held to be an
establishment within the meaning of the 1972 Act, it was clearly stated that
where the person was employed in Railway Administration as casual
labourer on wages not exceeding Rs. 1000/- per mensem and was holding
Civil Post in the Central Government, but subsequently absorbed in
temporary regular service as temporary laskar in the same establishment; it
would be impossible to escape the conclusion that the person was not an
employee as defined in Section 2(e) and he would be entitled to claim
gratuity allowance in respect of the period of his service as casual labourer
in Railway Administration under Section 4, even in the Central Government
at the time of retirement.
The decision of the Kerala High Court, thus, does not advance the
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case of the Respondent herein. Therein the question raised herein was not
raised.
Reliance of Mr. Banerjee upon Rule 15(4)(ii) of the 1993 Rules is
misplaced. Rule 15 provides for recovery and adjustment of Government or
railway dues from pensionary benefits. Sub-rule (1) of Rule 15 enjoins a
duty on the Head of Office to ascertain and assess Government or railway
dues payable by a railway servant due for retirement, whereas sub-rule (2)
thereof provides for recovery of the dues against the retiring railway servant
in terms of sub-rule (4). Clause (ii) of sub-rule (4) of Rule 15 stipulates
recovery of losses specified in sub-clause (a) of clause (i) of sub-rule (4) and
which has nothing to do with the computation of the amount of payment of
gratuity.
We have noticed hereinbefore that in terms of the 1993 Rules the
emoluments were to be paid in terms of the recommendations made by the
Fourth Pay Commission. The Fifth Pay Commission no doubt
recommended that dearness pay be linked to All India Consumer Price Index
of 12.1.1966 as on 1.7.1993 but, the entitlements of the employees in terms
thereof was directed to be prospectively affected with effect from 1.4.1995.
The Central Government accepted the said recommendations only with
prospective effect from 1.4.1995 in terms whereof 97% of the dearness
allowance was to be paid to those who were drawing salary up to Rs. 3500/-
as basic pay. The Respondent retired on 31.1.1995. The recommendations
of the Fifth Pay Commission, thus, were not applicable in his case.
It is now a well-settled principle of law that financial implication is a
relevant factor for accepting revision of pay. [See Hec Voluntary Retd.
Emps. Welfare Soc. & Anr. v. Heavy Engineering Corporation Ltd. & Ors.,
2006 (2) SCALE 660 and State of Andhra Pradesh and Anr. v. A.P.
Pensioners Association & Ors., JT 2005 (10) SC 115].
The matter might have been different if the revised scale of pay in
terms of the recommendations of the Fifth Pay Commission would have
been made applicable to the cases of the employees who had also retired
prior to 1.4.1995 as was noticed by this Court in U.P. Raghavendra Acharya
and Ors. v. State of Karnataka & Ors, [2006 (6) SCALE 23].
For the reasons aforementioned, the impugned judgment cannot be
sustained which is set aside accordingly. The appeal is allowed. No costs.